Bitcoin Sells Out: How an underground product gains acceptance and loses mystique

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Bitcoin
Photo by Zach Copley / Flickr user zcopley

Going back millenia, people have been looking underground for their riches. Gold was extracted from the earth and became one of the most-valuable and most-resilient currencies in history.

Now as we enter the digital age, society has started looking to the Internet underground for a new currency, and it appears Bitcoin has caught its eye.

The open-source, digital currency has been around for several years now, but its value suddenly skyrocketed in early 2013 as more services began accepting them as payment.

Then on Monday, a branch of the U.S. Treasury called the Financial Crimes Enforcement Network (FinCEN) released a set of guidelines for incorporating digital currencies into traditional markets – without ever directly referencing Bitcoin itself, of course.

While the gut reaction might be to view this step as the moment Bitcoin became wholly legitimized, many of its supporters have decried it as a betrayal of the libertarian values the currency represented.

“Bitcoin is the first currency on the Internet that has no connection to a national government, has no connection to anything but the

Jesse Hirsh explains that bitcoin is the first digital currency independent of any state government.
Jesse Hirsh explains that bitcoin is the first digital currency independent of any state government.

Internet economy itself,” web strategist Jesse Hirsh told rdigitaLIFE. “(It) was created by an anonymous individual and is backed by anonymous collectives who want to see it rise. Not just because they like it as a technology, but because they distrust traditional governments. Because they distrust the way in which the current economy is controlled.”

Bitcoin is not taxed or regulated by a governing body; it exists outside of state control. As such, it’s celebrated by a particularly libertarian, or even anarchist sector of the Internet.

So, in an ideological sense, the governmental recognition that the currency is starting to attain runs counter to its initial reason for being. As Andrew Leonard keenly observes on Salon:

“There’s a contradiction at the heart of bitcoin. The more popular bitcoin gets, whether as a symbol of resistance or a perceived safe haven in financially troubled times, the more government attention it will inevitably draw, and the more inexorably it will be sucked into existing regulatory structures. Incomes denominated in bitcoins will be taxed. Efforts at money laundering will be cracked down upon. It’s the price of success. Resistance is futile.”

So while Bitcoin may have a “huge head start” on other digital products in the race to become some form of international currency, as Hirsh puts it, its broad acceptance might turn off its initial adherents. The DIY, punk ethos that seemed to underpin the rise of Bitcoin may be a thing of the past. (If/when the Associated Press issues an official style decision on Bitcoin vs bitcoin, that could be the Dylan-goes-electric moment of digital currency. For now, rdigitaLIFE is going to roll with the upper-case.)

Whether the Internet’s most dedicated libertarian hacker collectives like it or not, Bitcoin may find itself dragged, kicking and screaming, into the mainstream.

Who knew money could sell out?

By Andrew Evans

 

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